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Negotiating Closing Costs as Buyer or Seller

Buying and selling a home is often more costly than many people think, namely because of closing costs tacked on to the final transaction.

Feb 4, 2014

When it comes to setting up a personal finance budget for purchasing or unloading a home on the market, it’s important to understand the type of additional fees that may be added. Additionally, it’s also critical to know which of these expenses are mandatory, and which ones may be negotiated with third parties.

Overall, both buyers and sellers may be financially responsible for some portion of the housing transaction. Outlined below is a list of the most common fees and expenses each party may be subject to upon closing, according to Zillow.

Types of fees

If you are purchasing a home, it’s likely that you will take on a greater share of closing costs than the seller. These fees may include loan origination, appraisals, tax servicing, legal, bank processing, recording, notary and flood certification costs. Additionally, buyers are often required to pay for title insurance, and pre-paid interest and insurance. In some instances, new buyers may also be required to pay property taxes and homeowners association fees, both of which may be prorated based upon when the transaction took place.

Sellers, on the other hand, are generally responsible for covering real estate commission costs. Although they are typically subject to this fee only, it is often a higher amount than the combined total of what buyers pay in closing costs, because the commission is calculated as a percentage of the total sales cost.

Negotiating closing costs

Because fees and closing expenses can tack between hundreds to thousands of dollars on a buyer’s final bill, negotiating certain fees may be required in order to save money. Buyers should understand that while not all fees can be eliminated, negotiating down others is a standard practice and may help them walk away with more money in their pockets. For instance, many of the fees imposed by lenders can be negotiated, according to Bankrate.com. These fees may include application, origination, commitment, loan discount, broker, tax-related service and underwriting costs.

However, fees charged by third parties may be more challenging to get out of, such as appraisal, credit report and inspection fees. As the news source explains, lenders have contracted these fees at set rates, meaning that negotiating them down may be more challenging, albeit not impossible.

Resources like The Homeowner’s Café by Zions Bank are great places for you to ask questions about the details involved in buying or selling a home.

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The information contained herein may not represent the views and opinions of Zions Bank or its affiliates. It is presented for general informational purposes only and does not constitute tax, legal or business advice.